Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.
Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter11: Linear Optimization Models
Section: Chapter Questions
Problem 7P: Vollmer Manufacturing makes three components for sale to refrigeration companies. The components are...
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